New CAATSA-related Executive Order; 33 persons added to CAATSA list of Russian defence & intelligence sectors; 2 Chinese persons sanctioned

Last week (20 September), US President Donald Trump issued a new  Executive Order to further the implementation of certain CAATSA-related sanctions with respect to the Russian Federation. See new OFAC FAQ, Presidential Statement and Special Press Briefing for further details. In addition, the US Secretary of State has taken two actions to implement his delegated authorities pursuant to section 231 of CAATSA and to “further impose costs on the Russian Government for its malign activities”.

First, the Secretary of State has added 33 additional persons to the section 231(d) CAATSA list of those “being a part of, or operating for or on behalf of, the defense or intelligence sectors of the [Russian government]”. This action increases the number of persons identified to 72 (39 persons were originally identified in October 2017 – see previous blog). This list does not itself impose sanctions, but any person who knowingly engages in a “significant transaction” with any of the identified persons will be subject to mandatory sanctions, pursuant to section 231(a) of CAATSA.

Second, in consultation with OFAC (see Notice here), the Secretary of State has sanctioned Chinese entity Equipment Development Department (EDD) and its director, Li Shangfu, for “knowingly engag[ing] in significant transactions with a person that is a part of, or operates for or on behalf of, the defense sector of the [Russian government]”. According to the US Department of State Fact Sheet (which includes the additional 33 identified persons), China took delivery from Russia of ten Su-35 combat aircraft in December 2017 and a batch of S-400 (a.k.a. SA-21) surface-to-air missile system-related equipment in January 2018. Both transactions were negotiated between EDD and Russia’s main arms export entity, Rosoboronexport; an entity identified on the aforementioned section 231(d) CAATSA list. The following 5 sanctions have been selected from section 235 of CAATSA to be imposed on EDD:

  1. A denial of export licences;
  2. A prohibition on foreign exchange transactions under US jurisdiction;
  3. A prohibition on transactions with the US financial system;
  4. Blocking of all property and interests in property within US jurisdiction; and
  5. The imposition of sanctions on an EDD principal executive officer, namely, its director Li Shangfu, which include a prohibition on foreign exchange transactions under US jurisdiction, a prohibition on transactions with the US financial system, blocking of all property and interests in property within US jurisdiction, and a visa ban.

This is the first time the US has sanctioned anyone under section 231 of CAATSA for knowingly engaging in a significant transaction with a person identified as “being a part of, or operating for or on behalf of, the defense or intelligence sectors of the [Russian government]”.

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About Michael O'Kane

Michael O'Kane

Michael was called to the Bar in 1992 and prior to joining Peters & Peters was a senior specialist prosecutor at the Crown Prosecution Service Headquarters (CPS). He was a key member of a small specialist unit responsible for the prosecution of serious and high-profile fraud, terrorist,...

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